SpaceX IPO jitters deepen tech stock selloff

Technology stocks tumbled on Tuesday, extending a selloff that began in early June, as anxiety over the upcoming SpaceX IPO and a retreat from hot AI-related plays weighed on sentiment. The decline was broad-based, with major tech indices and individual names under pressure. Investors are growing cautious ahead of the highly anticipated SpaceX IPO later this week, which could draw significant capital away from existing tech stocks. At the same time, the AI trade—a key driver of market gains in recent months—is showing signs of exhaustion, with traders taking profits after a prolonged rally. For equities traders tracking these moves, NowPrice provides real-time quotes on major tech stocks and indices to help navigate the volatility.

The selloff reflects a broader reassessment of risk in the tech sector, where valuations have become stretched relative to historical norms. The forward P/E for the Nasdaq 100 has risen above 25x, well above its 10-year average of 20x, making it vulnerable to profit-taking. The Fed model, which compares earnings yield to the 10-year Treasury yield, currently shows the equity risk premium near zero, suggesting stocks offer little compensation over bonds. This dynamic has historically preceded corrections, especially when breadth indicators like the percentage of stocks above their 200-day moving average decline—as they have in recent weeks. Sector rotation is also underway, with capital flowing from tech into defensive sectors like utilities and healthcare, which have lower valuations and more stable earnings. Buyback yields, which had been a key support for tech stocks, are also thinning as companies conserve cash ahead of potential economic headwinds. Options-implied volatility, as measured by the VIX, has spiked above 20, indicating heightened uncertainty and demand for downside protection.

Looking ahead, market participants will focus on the SpaceX IPO pricing and first-day trading performance, which could set the tone for the tech sector. Additionally, any shifts in Federal Reserve policy expectations or macroeconomic data releases could further influence risk appetite. Traders should monitor key support levels in the Nasdaq and other tech-heavy benchmarks for signs of stabilization or further downside. The upcoming earnings season will also be critical, as companies must justify their valuations with strong results. If the AI trade continues to fade and the SpaceX IPO fails to generate sustained enthusiasm, the selloff could deepen, testing the 200-day moving average for the Nasdaq. Conversely, a strong debut could restore confidence and attract buyers back into the sector.